Regulators Gone Wild

The Supreme Court has reined in some of the Biden Administration’s regulatory excesses, but the federal bureaucracy is relentless. And now the White House is quietly changing its analytical methods to make it easier to impose new rules while disguising their cost. If you think regulation has been running amok in the last two years, buckle up.

That’s the meaning of the update to what Beltway wonks call the “circular,” which is guidance from the White House Office of Management and Budget (OMB) that tells federal agencies how to calculate regulatory costs. The guidance is meant to protect taxpayers by requiring that any proposed regulation justify its cost, based on standard criteria. OMB’s regulatory shop was established to be a check on agencies that want to extend their power willy-nilly regardless of cost.

Now even that guardrail is coming off. In April President Biden issued an executive order instructing OMB to “modernize the regulatory process.” By “modernize” he means remove restraints.

Under Mr. Biden’s order, a “significant regulatory action” is redefined as one expected to have a $200 million annual economic cost, up from $100 million currently. The cost side is then subjected to accounting gimmickry that reduces the apparent impact on the U.S. economy and society.

OMB also tips the benefit side of the cost-benefit ledger by allowing consideration of the “global effects of the regulation,” not merely how new rules affect Americans. That’s right. A perceived benefit for the world can figure into the analysis of a new rule as much as the cost to the people of, say, East Palestine, Ohio. This is intended to be a particular green light for new climate regulation.

All of this doesn’t make headlines but it will have a bigger impact than nearly everything Congress does. One of the casualties will be the states that are the subject of rules, and the guidance rewrite is drawing fire from 26 state Attorneys General who say the revision “turns federalism on its head.” In a letter to OMB, the AGs write that the new rule will “decrease the utility of cost-benefit analysis while increasing the power and flexibility of federal regulators.”

The letter says the revisions will also “encroach on traditional areas of State concern” by claiming that State governments are not “effectively addressing the issues at hand.” The Administration is “attempting to manipulate the regulatory process,” the AGs add, by “adjusting the discount rate and adjusting the time horizon of regulatory analysis” so the presumed benefits of progressive regulations seem to trump costs.

By lowering the discount rate, the Administration can make hoped-for benefits that might occur years in the future weigh more heavily against the present regulatory costs. The new draft would also grant the executive branch wider authority for regulations “promoting distributional fairness and advancing equity.”

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The Biden Administration has already unleashed more regulatory costs on the economy than any in recent memory—even the Obama Administration. Mr. Biden first repealed the Trump Administration rule that for every new regulation, two had to be repealed.

Then his regulators went wild. Casey Mulligan, a University of Chicago economist, recently looked at the Biden rules through 2022 and said the overall cost is $5,019 per household. That’s 15% more than the $4,353 cost per household during a comparable period in the Obama Administration. The Trump Administration had reduced regulatory costs by $2,636.

According to the Competitive Enterprise Institute’s Clyde Wayne Crews, the Biden Administration has 297 “economically significant” regulations in the pipeline, and his average has been 97 per year compared to an average of 69 a year for Mr. Obama and 49 for George W. Bush. That number will appear to fall if Mr. Biden raises the bar for economically significant regulations to $200 million, which is part of the point.

But don’t be fooled. Mr. Biden is setting new records as the super regulator in chief, and all of us will pay for it.